brahimʼ we deliver halal cuisine of the world

Brahimʼs Holdings BerhadANNUAL REPORT 2012

(82731-A) (Incorporated in Malaysia)

Brahimʼs Holdings Berhad(Company No.: 82731-A)

Corporate Office7-05, 7th Floor, Menara Hap SengJalan P. Ramlee50250 Kuala LumpurWilayah PersekutuanMalaysiaTelephone: 03-2072 0730Facsimile: 03-2072 0732

KL Operations CentreA-6-4, Megan Avenue 1189, Jalan Tun Razak50400 Kuala LumpurTelephone: 03-2181 6393 & 03-2161 2575Facsimile: 03-2161 2608

Email: [email protected]

www.brahimsgroup.com

We Deliver Halal Cuisine of the World

IN THIS REPORT

p05Calendar ofEvents 2012

p07Financial Highlights 2012

p08Board of Directors

p09CorporateInformation

p10CorporateStructure

p11Letter toShareholders

p20Chief Executive Officer’s Profile

p21Management Discussion & Analysis

p37CorporateResponsibility

p47Board Charter

p49Audit Committee Report

p52Corporate Governance Statement

p62FinancialStatements

p161List of Properties

p162Analysis of Shareholdings

The cover visual depicts the group’s core business of in-flight catering and synergies with the Group’s other businesses. The Company is growing towards a better tomorrow in providing quality products and services in a more aggressive and enterprising manner, meeting new market demands and evolving customers needs for sustainable growth. The cover also shows its synergistic strategy and embodiment of new life that represents the new partnership illustrating a stronger and more enriching vision and mission.

COVER RATIONALE

p06 Media Highlights2012

p16Board ofDirectors’ Profile

p46Code of Ethics

p59Statement on Risk Management & Internal Control

p166Notice of 14th Annual General Meeting

Proxy Form

We onlyuse the freshest

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Vision Statement

To be an integrated high performance Halal Food Group with a brand globally

recognised for its halal quality and food safety from farm to fork.

Our Mission

To achieve a RM1.0 billion revenue by 2017 and rewarding stakeholders through steady earnings growth and dividends.

To constantly improve execution skills, upgrading R&D processes and financial and risk management to meet future challenges.

To develop viable and sustainable CSR programmes and be a preferred employer.

4 Brahim’s Holdings Berhad (82731-A)

CALENDAR of EVENTS 2012

January

1st - Mr. Goh Kee Kuang appointed as new Chief Executive Officer of Brahim’s Holdings Berhad

Febuary

8th - MOU signing with Thai Roung Ruang Sugar Group (“TRR”)

13th - Announced proposed disposal of TISB

14th - Announced acquisition of Admuda Sdn Bhd

March

22nd - Completion of Section 132D, 10% placement of 17.9 million Shares of BHB

April May

15th - 30th AGM at Menara Hap Seng

18th - Announced acquisition of 49% BLSG from LSG Asia

25th - Announced 1st Quarter results

29th - Participated in “Invest Malaysia 2012”

June

1st - Loan signing between OSK Investment Bank Berhad & BHB

9th - Brahim’s sponsorship of Japan Super GT event at Sepang F1 track

July

11th - EGM : Acquisition of 60% equity interest in Admuda Sdn Bhd

13th - Launching of Baitul Hayati Foundation by Y.A.Bhg. Tun Abdullah at Cafe Barbera

August

16th - Loan signing at MITI witnessed by Y.B. Dato’ Mukhris Tun Mahathir (Deputy Trade Minister) between Maybank & Admuda Sdn Bhd

17th - Announced 2nd Quarter results

September

3rd - UITM International Hospitality & Tourism Conference 2012 sponsorship

6th - EGM : Proposed acquisition of 49% equity interest in BLSG

26th - Cafe Barbera Jakarta 1st outlet launching

0ctober

25th - Seminar on “Issues and Challenges in Airline Catering” by Professor Peter Jones at Menara Hap Seng

November

1st - Prize giving ceremony & launch of Brahim’s Contest at Cafe Barbera

10th - Board of Directors retreat in Jakarta, Indonesia

21st - Announced 3rd Quarter results

30th - Loan signing between BHB and Standard Chartered bank, witnessed by Y.B. Senator Dato’ Donald Lim Siang Chai (Deputy Finance Minister)

December

5th - Completed the adjourned EGM : Proposed acquisition of 49% equity interest in BLSG

23rd - Cafe Barbera catering to Proton / Lotus event

5Annual Report 2012

MEDIA HIGHLIGHTS2012


FINANCIAL HIGHLIGHTS 2012

Total Assets (’000)

RM340,201

SUMMARYOFFINANCIALSTATEMENT 2006 2007 2008 2009 2010 2011* 2012

Statements of Comprehensive Income (RM ‘000)Revenue 14,603 12,275 107,592 156,741 165,811 186,113 196,637Profit/(Loss) before tax 3,931 (699) 1,639 11,176 19,639 24,465 24,254Profit/(Loss) after tax 3,931 (699) (3,660) 5,977 12,244 16,189 15,177Profit/(Loss) attributable to equity holders of the company 3,931 (699) (4,103) 2,382 6,552 9,503 8,663EPS/(LPS) (sen) 8.02 (1.43) (2.80) 1.33 3.66 5.31 4.30

Statements of Financial Position (RM ‘000)Issued and paid-up capital 49,005 49,005 179,005 179,005 179,005 179,005 214,805Total equity 26,432 25,732 159,890 152,051 164,294 179,840 230,442Total assets 43,408 44,369 287,081 275,484 271,619 303,829 340,201

* restated

20102009200820072006

RM 287,081,000RM 275,484,000

RM 271,619,000RM 303,829,000

RM340,201,00020112012

RM 44,369,000RM 43,408,000

Revenue (‘000)

RM196,637

Profit Before Tax (‘000)

RM24,254

Profit After Tax (‘000)

RM15,177

20102009200820072006

RM 107,592,000RM 156,741,000

RM 165,811,000RM 186,113,000

RM196,637,00020112012

RM 12,275,000RM 14,603,000

20102009200820072006

RM 1,639,000RM 11,176,000

RM 19,639,000RM 24,465,000

RM24,254,00020112012

RM (699,000)RM 3,931,000

20102009200820072006

RM (3,660,000) RM 5,977,000

RM 12,244,000RM 16,189,000

RM15,177,00020112012

RM (699,000)RM 3,931,000

7Annual Report 2012

Brahim’s;

Every Heart, Every Home.1. DatukIbrahimBinHajiAhmad

Executive Chairman

2. TanSriDato’MohdIbrahim BinMohdZain Non-Independent Non-Executive

Director

3. MohamedZamry BinMohamedHashim Executive Director

4. Col(Rtd)Dato’IrChengWah Independent Non-Executive Director

5. GohJoonHai Independent Non-Executive Director

6. Dato’ChooKahHoe Non-Independent Non-Executive

Director

AUDITCOMMITTEE

Col(Rtd)Dato’IrChengWahChairman/ Independent Non-Executive Director

GohJoonHaiIndependent Non-Executive Director

Dato’ChooKahHoeNon-Independent Non-Executive Director

NOMINATIONCOMMITTEE

GohJoonHaiChairman/ Independent Non-Executive Director

Col(Rtd)Dato’IrChengWahIndependent Non-Executive Director


REMUNERATIONCOMMITTEE

Dato’ChooKahHoeChairman/ Non-Independent Non-Executive Director


Col(Rtd)Dato’IrChengWahIndependent Non-Executive Director

CHIEFEXECUTIVEOFFICER

GohKeeKuang

BOARD OFDIRECTORS

54

12

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CORPORATE INFORMATION

COMPANYSECRETARIES

PangChiaTyng(MAICSA 7034545)

LimLeeKuan(MAICSA 7017753)

REGISTEREDOFFICE

10th Floor, Menara Hap SengNo. 1 & 3, Jalan P. Ramlee50250 Kuala LumpurTel : 03-2382 4288Fax : 03-2382 4170

BUSINESS/CORPORATEOFFICE

7-05, 7th FloorMenara Hap SengJalan P. Ramlee50250 Kuala LumpurTel No : 03-2072 0730Fax No : 03-2072 0732

Brahim’s is acknowledged as a global and Malaysia’s leading HALAL in-flight catering company and major operator of restaurants and cafes in KLIA and LCCT and soon in KLIA 2.

Brahim’s serves over 36 international commercial airlines flying out of KLIA and Penang with MAS as its major customer. Brahim’s produces an average of 40,000 meals per day out of its flight kitchen in Sepang, KLIA catering to over 190 flights daily.

AUDITORS

CroweHorwathLevel 16, Tower CMegan Avenue II12, Jalan Yap Kwan Seng50450 Kuala LumpurTel No : 03-2788 9999Fax No : 03-2788 9998

PRINCIPALBANKERS

StandardCharteredBankMalaysiaBerhad

STOCKEXCHANGELISTING

MainMarket,BursaMalaysiaSecuritiesBerhad(“BMSB”)Stock Name: BRAHIMSStock Code: 9474Sector: Trading / Service

SHAREREGISTRARS

SymphonyShareRegistrarsSdnBhdLevel 6, Symphony HousePusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling JayaSelangor Darul EhsanTel : 03-78418000Fax : 03-78418152

SOLICITOR

JeffreyWong&Partners4th Floor, Ghee Hong Building,No. 47, Jalan Ampang, 50450 Kuala Lumpur.Tel : 03-9072 3630Fax : 03-2072 7036

9Annual Report 2012

CORPORATE STRUCTUREas at 26 April 2013

100% Brahim’sAirlineCateringHoldingsSdnBhd(Formerly Known As Brahim’s-LSG

Sky Chefs Holdings Sdn Bhd)

100% CafeBarbera(SEA)SdnBhd

100% TamadamCrestSdnBhd

100% TamadamMarketingSdnBhd

100% Brahim’sTradingSdnBhd(Formerly Known As Tamadam CWT Sdn Bhd)

60% AdmudaSdnBhd

100% TamadamIndustriesSdnBhd

30%

Brahim’sAirlineCateringSdnBhd(Formerly Known As LSG Sky Chefs-

Brahim’s Sdn Bhd)

MalaysiaAirlinesSystemBhd

51% DewinaHostSdnBhd

70%


LETTER TOSHAREHOLDERS

DearFellowShareholders,

On behalf of the Board, I am pleased to present my FIFTH ANNUAL REPORT to Shareholders. In the previous annual report I mentioned Year 2011 was a period of strong performance at Brahim’s Holdings Bhd (BHB) and we reported earnings at record high. I also touched on building a strong foundation to undergrid our business ambitions beginning with our “Transformation Plan” in 2012. Taking our transformation programme seriously, your Board held a retreat session in Jakarta on 10 and 11 September 2012 to review and take stock of the progress made.

AYEAROFACQUISITIONSIN2012

In the year 2012, your Company continued with its growth momentum and announced 2 major acquisitions. Firstly, the acquisition of a 60% equity

interests in Admuda Sdn Bhd which holds a licence from MITI for the manufacturing of refined sugar and molasses designated in Sarawak, East Malaysia. Whilst the plant has to be located in Kuching, Sarawak, there are no further restrictions as to its imports of raw sugar and exports of refined sugar. Details of this acquisition were spelt out in a ‘Circular to Shareholders’ dated 26 June 2012.

Secondly, the company also announced the acquisition of the remaining 49% shares in Brahim’s–LSG Sky Chefs Holdings Sdn Bhd (BLSG), which it does not own, making BLSG a 100% subsidiary of BHB. This acquisition will have a profound impact on BHB, as it will allow for a full consolidation of revenue and earnings from the flight catering business as opposed to the past few years of merely equity accounting for revenue and earnings only.

In short, this acquisition upon its completion, will create a quantum leap in your Company’s performance. I am pleased to inform Shareholders that this major milestone was finally completed on 7 January 2013.

The other important follow through was our acquisition of 51% in Dewina Host Sdn Bhd, a major F&B operator in KLIA and LCCT back in 2011. For this year 2012, your Company was able to recognise a full 12 months contribution from this business division.

Full details of your Company’s operations and performance are now discussed under the Section “Management Discussions and Analysis”. This section was initiated in our financial reporting since 2011 in line with best practices and recommendations of Bursa

Your Board is mindful of earnings dilutions and thus pursued certain growth dynamics to reflect earnings visibility in tandem with enlarging its core competency business footprint.

Your Group’s future plans include earnings accretive M&As, and becoming a globalised champion in Halal Food Services and Facilities Management.

DatukIbrahimbinHajiAhmadExecutive Chairman

11Annual Report 2012

LETTER TOSHAREHOLDERS (continued)

Malaysia Securities Bhd. As part of our transformation and information dissemination best practices, we have also devoted a separate section to discuss your Group’s “Corporate Responsibility” activities for 2012.

SUSTAINEDPERFORMANCE

For 2012, the Group’s growth momentum was reflected in a 5.7% increase in revenue to RM196.6 million from RM186.1 million a

year ago. Gross profit before factoring administrative and overheads cost

including finance costs, improved by 10% YOY to RM114.1 million

(2011: RM103.7 million). Profit before tax remain stable at RM24.3 million (2011: RM24.4 million). However after tax profits were lower by 6.3% at RM15.1 million from RM16.1 million, arising from some non-allowable CAPEX improvements.

Arising from a 10% share placement permitted under section 132(D) of

Companies Act 1965 and partial share issuance in the

Admuda Sdn Bhd acquisition, your Company’s paid-up and issued share capital was enlarged from RM179.0 million to RM214.8 million in 2012. Your Board is mindful of earnings dilutions and thus pursued certain growth dynamics to reflect earnings visibility in tandem with enlarging its core competency business footprint. Your Group’s future plans include earnings accretive M&As, and becoming a globalised champion in Halal Food Services and Facilities Management.

Despite 2012 being a challenging year unsettled by the Euro crisis, the US

financial markets turmoil namely the ‘fiscal cliff’, slowdown in global growth and our dismal quarter one results arising from our core customer, MAS, routes realignment, your Group however, bounced back strongly in the last 3 quarters and even managed to surpass 2011 top line performance.

CORPORATEGOVERNANCE

Moving forward, your Group has charted out a growth roadmap and added a VISION and MISSION statement as a beacon to guide management and employees alike. This is necessary as the Group human resources continue to expand in line with its growth plans. We have also added a ‘Board Charter’ and ‘Code of Ethics’ to be in line with governance requirements and to also guide our staff members.

In Brahim’s Holdings Bhd we live and breathe on values that we believe in and integrity is an integral part of our values. It is a hallmark of ethical leadership that mirrors the whole organization and forms a baseline that serves as a reference or measure of the organization’s standing.

The Code of Business Ethics is important in maintaining integrity, exercising transparency and accountability, prudent management of resources and maximizing returns. Coupled with our Code of Conduct that articulates a clear policy that promotes zero tolerance to fraud and corruption, we in Brahim’s Holdings also develop a detailed implementation programme to ensure that every employee in the company possesses knowledge of all aspect of the policies, values and procedures fundamental to the codes.

BHB integrity plan provides culture

Gross profit before factoring administrative and overheads cost including finance costs, improved by 10% YOY to

RM114.1 million


LETTER TOSHAREHOLDERS (continued)

of professionalism that promote transparency and accountability amongst its workforce to foster and maintain public confidence in Company integrity and ensure shareholders interest are protected.

Warrant Buffet quoted, “In looking for people to hire, you look for three qualities: Integrity, Intelligence and Energy. And if they don’t have the first, the other two will kill you”. This quote by him do have influence over our talent recruitment and talent management process.

PROSPECTSANDGROWTHFOCUS

Your company continues to enlarge its footprint in the airport F&B business. Dewina Host Sdn Bhd, our 51% subsidiary company was successful in its bid for new outlets in the new KLIA2 terminal. It was awarded 2,572.60 sq. metres known as Premium Food Court at the international departure mezzanine area and another 133.76 sq. metres of F&B outlet space at the airside area.

Our outlets would offer a variety of Asian and international cuisines ranging from chicken rice, noodles, satay, Japanese fare, Indian cuisine to kebab and bread and pastries. There will also be a Burger King and speciality chicken F&B outlet. The KLIA2 terminal is expected to start operations by end June 2013.

Back in May 2012, your company was selected to participate with 41 other listed companies on Bursa Malaysia in the prestigious “Invest Malaysia 2012” event. The theme was ‘Capitalise in Asean’s Multinational Marketplace’ and was organized by Bursa Malaysia and Maybank Investment Bank. The companies were chosen as Ambassadors of Malaysia’s growth story, to represent and spearhead corporate Malaysia’s emergence as a dynamic and advancing economy. It is your Board’s every intention to steer Brahim’s Holdings Berhad into a global champion in the Halal food services business in line with its vision statement of being an integrated high performance Halal food group with a globally recognised brand.

To this end we will work hard to stay on course to deliver Shareholders’ value. We will focus strongly on three areas. Firstly, on cascading a new Vision and Mission Statement to the Group to rejuvenate optimism and teamwork. Secondly, to continue with sustaining earnings and growth trend, and thirdly, remaining agile whilst thriving in a competitive and uncertain environment.

ACKNOWLEDGEMENTS

In 2012, we have witnessed the entry of several new corporate Shareholders in addition to our existing Shareholders. I would like to express my appreciation to all our Shareholders alike for the confidence and staying with the company and supporting the Board in its growth and transformation programme. Our CEO Mr. Goh Kee Kuang, appointed on 1 January 2012, continues to captain the Group and provides leadership to navigate the Group forward.

My heartfelt thanks to our customers, partners, colleagues and our Bankers for their support throughout the year.

Finally, my special thanks and gratitude to my fellow Board Members for their wise counsel and invaluable contributions and also to Mr Cheam Heng Cheang who stepped down from the Board on 12 September 2012, for his past services to the Company.


26 April 2013


We’re passionateabout ourbusiness

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BOARD OF DIRECTORS’PROFILE


Aged 66, was appointed a director of Brahim’s Holdings Berhad on 15 May 2008. He was redesignated as the Executive Chairman on 9 July 2008.

Datuk Ibrahim is the founder and Executive Chairman of Dewina Holdings Sdn Bhd. He holds a Masters degree in Food Technology and a Diploma in Agriculture. A former lecturer and founding member of the Faculty of Food Science and Biotechnology, University Putra Malaysia and subsequently the Head of Corporate Research and Development at a public listed company. Datuk Ibrahim has wide experience in food and agrobased industries and has been involved in various professional organisations holding posts such as National Representative of the UNESCO Regional Network for Basic Sciences, Secretary-General of ASEAN Federation of Food Processing Industries, Member, International Standards Committee SIRIM, Council Member of Malaysian Microbiological Society and Malaysian Institute of Food Technology besides sitting on various state and federal advisory bodies.

Datuk Ibrahim founded Dewina Food Industries in 1986 and steered it to public listing on the BMSB in 1995 after which the company diversified into various food-related business and

went private again in 2002. Datuk Ibrahim was honoured with the Anugerah Usahawan (Entrepreneurship Award) in 1993 and with a Datukship in 2002. Datuk Ibrahim sits on the board of Brahim’s Airline Catering Sdn Bhd (“BAC”). Currently, he is a member of the Board of Trustees of Baitul Hayati Foundation (a Non-Profit Organisation). He is a shareholder and director of various other private companies.

Datuk Ibrahim attended eight out of the ten board meetings of Brahim’s Holdings Berhad held during 2012. He has no family relationship with any director and/or substantial shareholder of Brahim’s Holdings Berhad and has no conflict of interest with Brahim’s Holdings Berhad nor has he been charged with any offences within the last ten years.


BOARD OF DIRECTORS’PROFILE (continued)

TanSriDato’MohdIbrahimBinMohdZainNon-Independent Non-Executive Director

Tan Sri Dato’ Mohd Ibrahim bin Mohd Zain, aged 69, was appointed a director of Brahim’s Holdings Berhad on 15 May 2008.

Currently he is the Chairman of Century Software Holdings Berhad and Yayasan Arshad Ayub (a Non-Profit Organisation).

Tan Sri Dato’ Mohd Ibrahim is a graduate from British Institute of Management and Institute of Marketing in the United Kingdom and holds a Masters in Business Administration from the University of Ohio, in the United States of America. Upon his graduation in 1965, he was attached to University of Technology MARA (formerly known as Institute of Technology MARA) as a lecturer where he was later appointed as a Council member/ Director, a position which he held until October 2006.

Previously, he had served as Chief Executive of Amanah International Finance Berhad, Amanah Chase Merchant Bank Berhad and Oriental Bank Berhad, Chairman and Chief Executive Officer of Setron (Malaysia) Berhad, Chairman of Bank Kerjasama Rakyat (M) Berhad, Bescorp Industries Berhad, Pan Malaysian Industries Berhad, Pan Malaysian Holdings Berhad, Pan Malaysia Capital Bhd, Chemical Company of Malaysia Berhad and Kawan Food Berhad, Deputy Chairman of Metrojaya Berhad and Director of K & N Kenanga Bhd.

Tan Sri Dato’ attended seven out of ten board meetings of Brahim’s Holdings Berhad held during 2012. He has no family relationship with any director and/or substantial shareholder of Brahim’s Holdings Berhad and has no conflict of interest with Brahim’s Holdings Berhad nor has he been charged with any offences within the last ten years.

MohamedZamryBinMohamedHashimExecutive Director

Aged 57, was appointed a director of Brahim’s Holdings Berhad on 15 May 2008. Encik Mohamed Zamry holds a Bachelor of Arts (Hons) in Accounting from the University of Bolton, UK and a post-graduate Masters of Marketing from the University of Newcastle, Australia. He also holds a Diploma in Insurance, a Part 1 Banking Diploma from the Institute of Bankers, UK and a Diploma in Banking and Financial Services from the Institute Bank-Bank Malaysia. He is an Associate Member of the Malaysian Insurance Institute, an Associate of the Chartered Institute of Insurance, UK and also the Institute Bank-Bank Malaysia. He is also a Fellow Member of the Institute of Public Accountants, Australia, IPA and held the position of Vice-Chairman of the Malaysian branch of the IPA for a year.

Encik Zamry has extensive experience in banking, finance and insurance. He was attached to Standard Chartered Bank from 1977 to 1994 and later to Guardian Royal Exchange Berhad (now known as AXA Insurance) from 1996 to 1998. Since then, he has worked for a number of organisations involved in various business activities ranging from IT, property development and oil and gas. He has worked on a number of projects in Australia, Philippines and Indonesia.

Encik Zamry is currently Group Chief Operating Officer of Brahim’s-Dewina Group of Companies. His position in the company was re-designated to Executive Director in December 2012. He sits on the Board of Café Barbera (SEA) Sdn Bhd and Brahim’s Trading Sdn Bhd and he is also an Alternate Director in Brahim’s Airline Catering Sdn Bhd and Dewina Host Sdn Bhd. He is not a director of any other public companies.

Encik Zamry attended all the board meetings of Brahim’s Holdings Berhad held during 2012. He has no family relationship with any director and/or substantial shareholder of Brahim’s Holdings Berhad and has no conflict of interest with Brahim’s Holdings Berhad nor has he been charged with any offences within the last ten years.



Col.(Rtd)Dato’IrChengWahIndependent Non-Executive Director


Col. (Rtd.) Dato’ Ir Cheng Wah, aged 74, has been a director of Brahim’s Holdings Berhad since 24 December 1993.

Col. (Rtd.) Dato’ holds a Bachelor of Engineering degree in Civil Engineering from the University of Malaya. He is a Professional Engineer with the Board of Engineers, Malaysia. He is also a graduate of the Royal Military Academy, Sandhurst, UK and the Command and General Staff College, Fort Leavenworth, USA.

Col. (Rtd.) Dato’ served the Malaysian Armed Forces for 26 years. Amongst the appointments he held was Director of Armed Forces Works, Logistics Division, Ministry of Defence in 1978 and Director of Logistics, Ministry of Defence in 1980 before retiring in September 1983. On retirement he joined Genting Group, became Director of Development and later a Senior Vice President (Property Development) in Resorts World Berhad until his retirement in 2004. Currently, he is also a Director of Hwa Tai Industries Berhad and Kien Huat Berhad. Earlier, he had served as a Director in Koperasi Angkatan Tentera Malaysia Berhad (1978–1983), Chocolate Products Berhad (1986–1989), Pacific Bank Berhad (1983–2000) and Pacific Mas Berhad (2001–2007).

Col. (Rtd.) Dato’ is the Chairman of the Company’s Audit Committee. During the financial year he attended all10 board meetings as well as all the Audit Committee meetings held during 2012. He is also a member of Nomination Committee and Remuneration Committee. He does not have any family relationship with any director and/ or major shareholder of the Company, nor any personal interest in any business arrangement involving Brahim’s Holdings Berhad. To-date, there has not been any occurrence of conflict of interest with Brahim’s Holdings Berhad. He has never been convicted of any offence.

Aged 74, was appointed a director of Brahim’s Holdings Berhad on 22 March 2002. Mr Goh is the Chairman of the Nomination Committee and a member of the Audit Committee and Remuneration Committee.

Mr Goh graduated with a Bachelor of Arts (Honours) Degree from the University of Malaya in 1964. Subsequently, he obtained a Master of Business Administration from the University of British Columbia, Canada in 1966. He is a member of the Canadian Institute of Chartered Accountants, Malaysian Institute of Accountants and Chartered Tax Institute of Malaysia.

Mr Goh has been in public practice as a Chartered Accountant for over thirty years. He was a lecturer in the Faculty of Economics and Administration, University of Malaya. Later, he served as financial and corporate adviser to various organisations.

Mr Goh has been active in professional and social organisations and was a member of the Council of Malaysian Institute of Accountants between 1991 and 2000, during which time he served as Chairman of the Joint Technical Committee as well as Chairman of the Accounting and Auditing Committee. Earlier he was a member of the Council of the University of Malaya between 1972 and 1975 and a former Treasurer and Vice President of the Guild of Graduates, University of Malaya. He also served as a member of the General Committee of Royal Lake Club for many years and was President from 2006 to 2007.

Currently, he has no other directorship in any other public companies. Mr Goh is a member of the Company’s Audit Committee. He attended all the board meetings of Brahim’s Holdings Berhad as well as all the Audit Committee meetings held during 2012. He is also the Chairman of the Nomination Committee and a member of Remuneration Committee. He has no family relationship with any director and/or substantial shareholder of Brahim’s Holdings Berhad and has no conflict of interest with Brahim’s Holdings Berhad nor has he been charged with any offences within the last ten years.




Aged 59, was appointed a director of Brahim’s Holdings Berhad on 9 July 2008. He was re-designated as a Non- Independent Non-Executive Director on 18 September 2009.

Dato’ Choo holds a degree in Company Administration from Sheffield Hallam University and an MBA from the University of Wales and Manchester Business School. He holds professional qualifications as a Chartered Company Secretary, ACIS and is a founding and fellow member of the Malaysian Institute of Commercial and Industrial Accountants, FCIA and also a professional member of the Institute of Public Accountants, Australia, IPA.

Dato’ Choo started his banking career in 1980. After 10 years in commercial banking he ventured into merchant banking for another five years. In 1995 he set up DBS Bank (then known as the Development Bank of Singapore) Offshore Banking Branch in Labuan, Malaysia and grew its business into the top five most profitable overseas operations within a period of three years. In 1999, just after the Asian Financial Crisis, he was seconded to Thailand to manage DBS Thai Danu Bank and was the Deputy President and Executive Director of DBS Thai Danu Bank from 1999 to 2003. In DBS Thai Danu Bank, he personally led the Debt Restructuring Group and Enterprise Banking Group. He was Chairman of the

Y2K Task Force Committee and responsible for the Y2K Compliance of DBS Thai Danu Bank. Dato’ Choo returned to Malaysia as Country Manager in August 2003. He was Managing Director, Country Manager and Chief Representative for DBS Bank Ltd, Kuala Lumpur Representative Office in Malaysia. He also held the post of Chief Representative for DBS Bank, Yangon Office.

As an active banker, Dato’ Choo has authored three books on banking, published by the Institute of Banks, Malaysia and has presented numerous seminar papers on the Financial Services Sector. He has spoken at public forums in Malaysia and Thailand and is a trainer for the National Institute of Development Administration (NIDA), Thailand. He was a Chief Examiner for the Institute of Banks, Malaysia. For his contribution to the Financial Services Industry, he was awarded an Associate Fellowship by the Institute of Banks, Malaysia. He is also a resource person for the South East Asia Central Bank Training Centre (SEACEN) and has conducted courses for central bankers in Malaysia, Singapore, Taiwan, Korea, Thailand and Sri Lanka. Dato’ Choo was appointed to the Bank of Thailand, Executive Decision Panel in 1999 under the Thai Nationwide Debt Restructuring Framework. He held the post of Vice-Chairman, Singapore-Thai Chamber of Commerce for two terms since May 2000 and is an advisor to the Chonburi Chamber of Commerce, Thailand. In October 2004, he was awarded the Darjah Kebesaran Sultan Ahmad Shah Pahang Yang Amat Di

Mulia from HRH the Sultan of Pahang on His Royal Highness’ 74th birthday which carries the title Dato’. He was appointed a Council Member of the MCA SME Bureau in September 2005 for a three year term until 2008 and re-appointed in 2011. In August 2005, he was appointed as a Professional Advisor for the International and Offshore Banking Program by University Malaysia Sabah, Labuan International Campus, School of International Trade and Finance. In 2006, he was appointed to the advisory panel of the Young Entrepreneurs Association Malaysia (PUMM) for a term of two years. In May 2007, he was awarded the Certificate of Appreciation by the Central Bank Governor for his services as Examiner for the Diploma in Banking and Financial Services examinations. He is currently the Chairman of Labuan Investment Banks Group. He is also the Industry Advisor for the corporate management degree program in the Universiti Malaysia Sarawak. He is also a part-time tutor for Wawasan Open University in the subject of Corporate Finance and International Financial Management since 2010.

On June 2012, Dato’ Choo was appointed by Bank Negara Malaysia as a committee member in the Quality Assurance Committee for the Financial Sector Talent Enrichment Programme (FSTEP) for a one year period. On November 2012, Dato’ Choo was appointed as a steering committee member of the Asian Banking School by the Institute of Bankers Malaysia (IBBM) for a term of two years.

Dato’ Choo is a member of Company’s Audit Committee. He attended all the board meetings of Brahim’s Holdings Berhad as well all the Audit Committee meetings held during 2012. He was also appointed as a member of the Nomination Committee and Remuneration Committee on 9 July 2008 and thereafter became Chairman of the Remuneration Committee on 26 March 2012. He has no family relationship with any director and/or substantial shareholder of Brahim’s Holdings Berhad and has no conflict of interest with Brahim’s Holdings Berhad nor has he been charged with any offences within the last ten years.


CHIEF EXECUTIVEOFFICER’S PROFILE

GohKeeKuangChief Executive Officer

Mr Goh Kee Kuang was appointed as Chief Executive Officer on 1 January 2012. Mr Goh aged 57 years old, pursued his professional qualification, worked and qualified as a Chartered Certified Accountant in London from 1976 to 1982. He held the membership of Fellow of the Association of Chartered Certified Accountant and is currently a registered Chartered Accountant of the Malaysian Institute of Accountants.

Mr Goh returned to Malaysia in 1982 and has since then held key positions in several large public listed companies. Highlights of Mr Goh’s corporate experience include the role of Strategic Development Director at Ramunia Holdings Berhad and served in various strategic capacities as General Manager in the Office of the Chief Executive, as Chief Financial Officer and as Senior General Manager, Ranhill Group of Companies. He was the principal coordinator with Renong Group and its financiers for the Singapore Second Crossing project.

Mr Goh brings with him a wealth of experience in value creation, strategic planning, mergers and acquisitions and execution skills.


MANAGEMENT DISCUSSION& ANALYSIS

1.0 INTRODUCTION

Brahim’s Holdings Berhad’s Group is the country’s leading halal in-flight catering company through its 51% equity interests in BLSG which in turn owns 70% of LSGB. In January 2013, The Group had completed the acquisition of 100% equity interest in BLSG. In February 2013, BLSG was renamed as “Brahim’s Airline Catering Holdings Sdn Bhd”. And LSGB was renamed as “Brahim’s Airline Catering Sdn Bhd.” With this 100% acquisition, it is expected that BACH will enhance the contribution towards the Group.

The Group in 2011 completed the acquisition of 51% equity interests in Dewina Host Sdn Bhd, a major operator of restaurants and cafes in KLIA and LCCT. Dewina Host Sdn Bhd was successful in its bid for new outlets in the new KLIA 2 terminal, expected to be operational by June 2013. It was awarded 2,572.60 sq metres known as Premium Food Court at the international departure mezzanine area and another 133.76 sq metres of F&B outlet space at the airside area. This expansion of new outlets is expected to generate a higher level of contribution due to increase in number of passengers as compared to the previous year.

On July 2012, The Group also completed the acquisition of 60% equity interests in Admuda Sdn Bhd. This company has a valid license to carry on manufacturing activities for refined sugar and sugar molasses. It was expected that it will contribute progressively towards the Group once the plant is completed and operational which is expected to be in year 2015.

The Group has shifted from its logistics business to a more sustainable airport centric food services business and other Food & Beverage businesses. The Group in its transformation program will continue to seek out opportunities driven by our core competencies and strength in food services and food related businesses to broaden and deepen the Group’s earnings base.

In this discussion and analysis of our financial condition and results of operations, we have included information that may constitute ‘forward-looking statements’. These statements are not historical facts, but instead represent only our beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside our control. This information includes statements of current condition and may relate to our future plans and objectives.

Dewina Host Sdn Bhd will

expand its F&B airport

centric business footprint by

an additional 10 new outlets

on 2,706.36 sq metres at

KLIA 2.


MANAGEMENT DISCUSSION& ANALYSIS (continued)

2.0 EXECUTIVEOVERVIEW

(RM’000) % 2012 2011 ChangeSelectedFromStatementOfComprehensiveIncome Revenue 196,637 186,113 5.7 Cost of Sales (82,572) (82,355) (0.3)Gross Profit 114,065 103,758 9.9 Other Income 3,203 799 300.9 Less: Distribution Expenses (126) (167) 24.6

Administrative Expenses (75,866) (69,814) (8.7) Other Expenses (11,893) (5,307) (124.1) Finance Costs (5,130) (4,805) (6.8)

Profit Before Tax 24,253 24,464 (0.9) Income Tax Expense (9,077) (8,276) (9.7) Net Profit After Tax 15,176 16,188 (6.3)Total Comprehensive Income Attributable to:- Owners of the Company 8,663 9,503 (8.8) Non-Controlling Interests 6,513 6,685 (2.6)

SelectedItemsFromStatementofFinancialPosition Property, Plant & Equipment 48,582 45,930 5.8 Goodwill on Consolidation 198,148 178,401 11.1 Trade Receivables 33,070 38,993 (15.2)Fixed Deposits & Cash/Bank Balances 35,383 29,117 21.5 Total Liabilities 109,759 123,989 11.5 Shareholders’ Equity 217,014 171,563 26.5

Commentary:Our diluted earnings per share was 4.30 sen for the year ended December 2012, compared with restated EPS of 5.31 sen for the year ended December 2011, lower by 19% year on year. Return on shareholders equity (ROE) was 7.0% for 2012 compared with 9.4% for 2011, representing a decrease of 25.5% over the previous year.

Book value per share increased by approximately 7.0% to RM1.07 compared with the end of 2011, whilst total assets grew by 12.0% to RM340.2 million. Share price increased by 112.5% to RM1.02 at year end as compared to the previous year.



2.0 EXECUTIVEOVERVIEW(cont’d)

Commentary:(cont’d)The Group generated net revenue of RM196.6 million, an increase of 5.7% over 2011 restated revenues of RM186.1 million. Despite a challenging operating environment, the pretax earnings recorded only a slight drop of 0.9% to RM24.3 million over restated 2011 pretax earnings of RM24.5 million. Arising from tax adjustments, the after tax profit was slightly reduced by 6.3% to RM15.2 million over restated 2011 figures of RM16.2 million. These results reflected a growth in our clients.

In 2012, the Group continues to maintain its dominant market share of airline in-flight catering in KLIA. The acquisition of 51% equity interests in Dewina Host Sdn Bhd was completed in July 2011, contributed positively to both top line revenues and earnings. Dewina Host Sdn Bhd operates 8 F&B outlets in KLIA and LCCT. They are also actively engaged in their expansion plans into KLIA 2 which schedule to operational by June 2013.

And the acquisition of 100% equity interest in BACH in January 2013 will see an improvement of result in year 2013 over the year 2012. For next financial year, the Group should be able to fully incorporate a full 12-months contribution from this acquisition.

With the KLIA 2 ready in year 2013, the revenue is expected to increase arising from MAS taking delivery of new aircrafts in 2012 and the potential success of their marketing initiatives. Creeping inflationary factors and rising energy cost may impact our operational expenditure going forward.

(RM’000) % 2012 2011 Change

KeyFinancialRatios Liquidity Working Capital 6,902 (19,924) 134.6 Quick Ratio 1.03:1 0.76:1 35.5 Current Ratio 1.08:1 0.80:1 35.0 Net Sales Per Working Capital 28.5 (9.3) 406.5

Leverage/Gearing Total Borrowed Funds to Shareholders’ Equity 0.25:1 0.40:1 37.5

Coverage EBITDA 36,362 35,727 1.8 EBITDA/Int. Exp + CPLTD 3.50 1.96 78.6 Profitability Return on Sales (%) 14.9 15.7 (5.1)Return on Assets (%) 4.5 5.3 (15.1)


2.0 EXECUTIVEOVERVIEW(cont’d)

(RM’000) % 2012 2011 ChangeProfitability(cont’d)Return on Equity (%) 7.0 9.4 (25.5)Gross Profit Margin (%) 58.0 55.7 4.1Operating Expenses (%) 86.7 84.7 (2.4) Operating Profit Margin (%) 14.9 15.7 (5.1)Profit After Tax Margin (%) 7.7 8.7 (11.5)Dividend Payout Rate (%) N/A N/A N/A ActivityRatio Interest Coverage Ratio 5.73:1 6.09:1 (5.9)Receivables Turnover Ratio (days) 61 76 (19.7)Payables Turnover Ratio (days) 22 31 (29.0)Asset Turnover (net sales/total assets) 0.58:1 0.61:1 (4.9)Profit Before Tax/Total Assets (%) 7.1 8.1 (12.3)

Growth(%) Total Assets Growth 12.0 11.9 0.8 Total Liabilities Growth (11.5) 16.5 169.7Net Worth Growth 28.1 8.9 215.7 Operating Profit Growth 0.4 18.8 (97.9)Net Profit After Tax Growth (6.3) 32.2 (119.6)Sustainable Growth 7.0 9.4 (25.5) OtherFinancialIndicators NA Per Share (RM) 1.07 1.00 7.0 Gross EPS (SEN) 11.29 13.67 (17.4)Net EPS (SEN) 4.30 5.31 19.0Share Price at Year End (RM) 1.02 0.48 112.5



3.0 BUSINESSOPERATIONSREVIEW

The Group’s core business in food services is the main contributor to Group earnings with in-flight catering services and F & B operations contributing to 97% of turnover and a 113% of bottom-line profits from operations. The logistic sector was turned around and now making a slight profit for the year 2012.

3.1 In-FlightCateringServices

LSG Sky Chefs-Brahims Sdn Bhd (LSGB), formerly known as MAS Catering Sdn Bhd, is the principal in-flight services provider at both the Kuala Lumpur International Airport (KLIA) and Penang International Airport. LSGB was renamed as “Brahim’s Airline Catering Sdn Bhd” (BAC) with effect from February 2013.

BAC currently serves 36 international airlines. BAC’s is the main vendor to MAS, the national carrier, while other clients include Air Asia, Air Asia X, Etihad, Cathay Pacific, China Airlines, Japan Airlines, Korean Air, Thai Airways, Emirates Airliness, Garuda, KLM, Indian Airlines, Eva Air and Pakistan International Airlines.

BAC caters to an average of 190 aircrafts per day and prepares an average of 35,000 to 40,000 meals per day from its huge and highly sophisticated flight kitchen located at the KLIA. Menus are planned in collaboration with in-flight services teams from the customer airlines who usually stipulate their requirement. The chefs at BAC will then suggest recipe modifications taking into account the locally available raw ingredients. A food tasting session is then arranged before a new menu is adopted and finally implemented. BAC’s flight kitchen is categoriesed into 3 departments known as the hot kitchen, the cold kitchen and the pastry and bakery kitchen. They produce a combinations of hot meals, cold salads, desserts, bread and pastries. The operations in the kitchen are enhanced by modern equipment.

Operating 24 hours daily with a maximum capacity of about 60,000 meals per day, BAC prides itself as a globally recognised 100% halal certified flight kitchen with a fully halal compliant integrated food logistic supply chain. Besides food, BAC also provides cabin handling services covering laundry services for pillows and blankets, filling the cabin trolley with items for in-flight sales as well as providing passenger headsets, newspapers and periodicals. With 1,193 staff operating from a 59,000 sq meter complex in KLIA, BAC is the world’s biggest halal flight kitchen and has won many international awards for quality and excellence.

In 2003, BAC entered into a catering agreement with MAS, for the exclusive right to supply and provide in-flight catering and cabin handling services to MAS at both the KLIA and Penang Airport. Current business growth was due to the increase in number of meals served as more passengers travelled from KLIA and Penang airports as well as fleet expansion by several airlines including MAS, Air Asia, Air Asia X and Emirates. MAS continues to be BAC’s main customer.

With 1,193 staff operating from a

59,000 sq meter complex in KLIA,

BAC is the world’s biggest halal

flight kitchen and has won many

international awards for quality

and excellence.



3.0 BUSINESSOPERATIONSREVIEW(cont’d)

3.1 In-FlightCateringServices(cont’d)

BAC is majority owned by Brahim’s-LSG Sky Chefs Holdings Sdn Bhd’ (70%)(since renamed Brahim’s Airline Catering Holdings Sdn Bhd) and the balance (30%) owned by Malaysia Airline System Berhad (“MAS”). BAC is located at the Catering Building, MAS Complex, South Support Zone, Kuala Lumpur International Airport, 64000 Sepang, Selangor Darul Ehsan.

3.2 RestaurantOperations

3.2.1 Dewina Host Sdn Bhd operates an exciting portfolio of F & B brands in KLIA and LCCT. They provide a mix of international brands and local favourites that cater to different travelers’ preferences. The restaurants and cafes currently in operation by Dewina Host Sdn Bhd at KLIA and LCCT are as follows:

OutletName TypeofFood OutletLocation OutletSize Served (approximate squaremeters)

1. Burger King Fast food Arrival Level, Main Terminal Building, KLIA 1502. Burger King Fast food Mezzanine Level, Satellite Building, KLIA 3093. Café Barbera Café Departure Level, Main Terminal Building, KLIA 884. Asian Café Café Departure Level, Main Terminal Building, KLIA 78 (rebranded as Kopitime)5. Food Paradise Casual Dining Mezzanine Level, Satellite Building, KLIA 7816. Taste of Asia Casual Dining Public Concourse, LCCT 3607. Café Espresso Café International Departure Hall, LCCT 1308. Café A/15 Café Domestic Level, Contact Pier, Main Terminal Building, KLIA 15 Total 1,911

3.2.2 Café Barbera (SEA) Sdn Bhd was incorporated in 2010 dealing in franchise gourmet coffee with an outlet at Lorong Maarof, Bangsar, on rented premises and a sub-franchise outlet at KLIA departure hall. It is a 100% subsidiary of Brahim’s Holdings Berhad. The unique concept of Café Barbera is based on an exceptional blend of coffee products, current food trends, and consumer demands for fresher, tastier, lighter and healthier fare. Currently, there are five (5) Café Barbera outlets in Malaysia; Café Barbera Bangsar, Café Barbera KLIA, Café Barbera Sunway Pyramid, Café Barbera Subang Skypark and Café Barbera Setia Walk Puchong. They also sell coffee beans to hotels that have their coffee machines installed at the hotels, selected up-market cafes and supermarkets.

The management plans to have another six (6) outlets in the coming years. Datuk Ibrahim Hj. Ahmad (the founder of Brahim’s Food) holds the exclusive rights of this franchise for Café Management, Franchise and Distribution for Malaysia, Singapore and Indonesia.

Barbera Caffe S.p.A., the Principal based in Naples, Italy was founded in 1870. Café Barbera offers world class high quality coffee and Italian dishes in a typically Italian café setting.



3.0 BUSINESSOPERATIONSREVIEW(cont’d)

3.3 WarehousingandLogisticsDivision

This business unit was turned around and now making slight profit of RM 0.076 million for the financial year 2012 against losses of RM4.1 million for financial year 2011. This unit operates a bonded warehouse on 15.134 acres on a sub-lease KTM land in North Port.

The Group has now rescinded the plan to divest this operations as it has

now been turned around.

4.0 BusinessEnvironment

4.1 GlobalOverview

The global growth outlook is expected to improve in 2013. Financial and policy risks have receded compared to the situation over the recent two years. Policy measures introduced in the latter half of 2012 have reduced policy uncertainties and stress in the financial markets. In the advanced economies, the pace of recovery is likely to be weak, with the differential in national growth rates reflecting the degree of economic and financial stress in the individual economies. The outlook for the emerging economies is relatively more favourable, despite their vulnerability to external developments. For most of these economies, domestic demand remains the key driver of growth. Key to the trajectory of inflation will be the prices of commodities, in particular, oil and food crops. Overall, the pace of global growth would be contingent on the strength of the revival in private sector activity in the US, the commitment towards a credible and comprehen sive set of crisis resolution policies in the euro area and the sustainability of domestic demand in the emerging economies.

The US economy is expected to register modest growth, supported by an improvement in private demand which is expected to partially offset the ongoing fiscal consolidation. Consumption activity will remain a key driver of the private sector-led growth, supported by a recovery in the housing and labour markets. In the housing market, the improvements observed towards the second half of 2012 - in sales, construction starts and prices - are expected to continue in 2013 amid an accommodative interest rate environment. The positive developments in the housing market have already been translated into higher consumer confidence and employment, particularly in the construction sector. The labour market is benefiting from sustained job creation, although the degree of improvement will be constrained by prevailing structural weaknesses including the elevated long-term unemployment rate and the decline in the labour force participation rate.

The global growth outlook is expected to

improve in 2013.



4.0 BusinessEnvironment(cont’d)

4.1 GlobalOverview(con’d)

A significant development is the improvements in the household balance sheet and its effects on consumer confidence. By mid-2012, household net worth improved by 27% since 2009, bolstered by the recovery in house prices and the progress in deleveraging. Nevertheless, a faster pace of recovery of the economy continues to be constrained by the fiscal headwinds. Although the ‘fiscal cliff’ was partially averted following the agreement on 1 January 2013 to extend selected tax cuts and unemployment benefits, other measures, such as the expiration of payroll tax and sequester cuts, could dampen the pace of recovery.

Economic activity in the euro area is expected to remain weak due to structural constraints and the continued fiscal consolidation. While tensions in the financial markets have receded, fragile growth still persists particularly in the crisis-affected economies due to the ongoing fiscal austerity measures and structural adjustments. The sustainability of the fiscal position of the crisis-affected economies in the euro area remains a major concern, with public debt ranging between 90% and 171% in 2012. Private sector activity is further undermined by the tight financing conditions and weak labour markets. Financial institutions continue to be affected by their exposure to crisis-affected economies, hampering the provision of credit to the real economy. Labour market conditions are particularly weak in the crisis-affected economies such as Spain and Greece, where unemployment rates are at 26.2% and 26.6% respectively in November 2012. At the regional level, policy decisions directed towards the strengthening of the euro area, including in the area of banking union and greater fiscal cooperation, will continue to influence financial markets, business sentiments and subsequently growth.

In Japan, economic growth is expected to moderate, reflecting the diminishing effects from reconstruction-related demand over the recent two years, amid protracted weakness in domestic activity. While the nation’s export performance is expected to recover gradually, growth will be supported primarily by more monetary and fiscal stimulus. Of significance, the Bank of Japan’s recently introduced price stability target of 2% and commitment towards more aggressive monetary easing is expected to support the efforts to overcome deflation and promote growth. In addition, the newly-elected Japanese government has introduced a ¥10 trillion stimulus package (2.5% of GDP), comprising mainly of public work programmes and the provision of financial aid to businesses, which will cumulatively support the economic recovery. The growth trajectory, however, remains contingent upon the effective transmission of these policy measures to real economic activity.





The economic performance in Asia is likely to improve in 2013, driven mainly by resilient domestic demand and a modest strengthening in export demand, particularly from the region. Government-led infrastructure investment will likely underpin the strength in domestic demand, particularly in the ASEAN economies. These initiatives include private-public partnerships in the Philippines, major infrastructure projects in Indonesia and rail transport network expansion programmes in Thailand and Singapore. Consumption growth will continue to be buttressed by income growth amid favourable labour market conditions, continued access to financing and government policy support, such as the implementation of, and increases in, minimum wages in several of the regional economies. In the more open economies, growth will be lifted by the gradual increase in global demand as the external environment improves. The economic expansion in PR China is expected to remain robust, with domestic economic activity set to become stronger during the year. While the Chinese government remains committed to restructuring the economy through efforts to boost consumption, targeted investments, particularly in infrastructure projects, will continue to be a key contributor to growth in the near term.

Globalinflation is expected to remain moderate in tandem with the modest improvement in global demand. In the advanced economies, underlying inflationary pressures are expected to be subdued, reflecting excess capacity and weak demand in these economies. There are, however, signs of demand-pull inflationary pressures in the emerging economies following the stronger domestic activity. Nevertheless, on the supply side, the risk of cost-push inflation is expected to remain restrained, given the expectations of modest increases in the prices of global commodities. There are, however, risks of periodic spikes in commodity prices as have been observed over the recent two years. In the oil market, an escalation of unrest in the Middle East and North Africa could lead to higher prices of crude oil. In addition, food prices are susceptible to fluctuations given the low inventory levels of staple grains in some key export markets and potential supply disruptions due to adverse weather conditions. Upside risks to commodity prices may also emanate from greater demand following rising financial flows into these markets.

Notwithstanding the improving global growth prospects, downsiderisks remain considerable. In the euro area, the policy measures undertaken in the latter part of 2012 have reduced acute crisis risks but the key fundamental constraints remain unresolved. The sovereign debt crisis in Europe could re-intensify if further progress on the crisis resolution plans and reform measures is not realised. A renewed rise in government borrowing costs could jeopardise the fragile recovery process and would set back the progress that has been made.





In addition, sharper-than-expected fiscal consolidation in the crisis-affected economies could also weaken growth prospects in the near term.

Given the divergent growth prospects between the advanced and emerging economies, the latter faces a different set of challenges. First, the large-scale policy easing in major economies has created massive amounts of liquidity, which has subsequently spurred a global search for-yield. Thus, the strong inflows of capital into the emerging economies are expected to continue. These inflows could result in macroeconomic and financial instability and might lead to excessive increases in exchange rates and asset prices in the recipient countries. Second, emerging economies could face higher inflationary pressures due to rising food and commodity prices. Upward pressures on prices could materialise in the event of supply disruptions arising from adverse weather conditions amid low inventories of selected food commodities. A confluence of these factors would pose challenges to policymakers in balancing the risks between growth and inflation, given the continued uncertainty in the global economic environment.

It should be noted that there is some upside potential to growth. In the US, a stronger-than expected recovery in the housing market may support business and consumer sentiments, cumulatively leading to a strengthening of private sector-led growth. Credible progress in policy setting in Europe has contributed to a gradual improvement in financial market conditions, which could facilitate an improvement in economic activity in the region. A firmer recovery would benefit the rest of the world through stronger trade activity and greater economic certainty.

(extracts from Bank Negara Malaysia Annual Report 2012)

4.2 OverviewandoutlookoftheMalaysianeconomy

The Malaysian economy is expected to remain on a steady growth path with an expansion of 5-6% in 2013. Economic activity will be anchored by the continued resilience of domestic demand, and supported by a gradual improvement in the external sector.

Domestic demand, which recorded the highest rate of expansion over the recent decade in 2012, is expected to remain the key driver of growth in 2013, albeit at a more moderate pace. Growth in public and private investment is expected to remain strong, following the exceptional growth in capital spending in 2012.

The Malaysian economy is expected to remain on

a steady growth trajectory of 5-6% in 2013.




4.2 OverviewandoutlookoftheMalaysianeconomy(cont’d)

Private investment is still expected to record a double-digit rate of growth, driven by the continued capacity expansion of the domestic-oriented firms, ongoing implementation of projects with long gestation periods and a gradual improvement in external demand. Private consumption is projected to grow at a more moderate rate in the second half of the year, but it will continue to be supported by sustained income growth and healthy labour market conditions. Public sector spending is also expected to record lower growth given the ongoing consolidation of the Government’s fiscal position and as the role of the private sector gains greater significance.

In line with the pace of expansion in domestic demand, imports of capital and consumption goods are also expected to moderate. However, imports of intermediate goods are projected to turn around and record positive growth as the improvement in the global economic environment leads to an increase in manufacturing exports. In particular, non-electrical and electronics (non-E&E) exports are expected to benefit from the positive growth prospects of the regional economies. Electrical and electronics (E&E) exports, meanwhile, are expected to experience a smaller contraction following manufacturers’ continued efforts to diversify their production line-up and shift into the fast-growing mobile telecommunication sub-segment. The rebound in manufactured exports, however, will be partially offset by lower commodity exports, due to the expected softening of commodity prices. Services exports are expected to be higher due to a stronger travel account in line with the promotional campaigns for the run-up to the Visit Malaysia Year 2014, while growth in services imports is expected to be slower given the lower volume of imports. Overall, with the gradual recovery in exports and lower import growth, net export of goods and services is expected to exert a lower negative contribution to real growth in 2013. Nevertheless, the growth of imports is expected to continue to outpace exports amid the continued deficit in the income account and in current transfers. The current account surplus, while still remaining large, is expected to narrow further in 2013.

The underlying fundamentals of the economy are expected to remain strong, and will continue to support the growth prospects for the economy. Of importance, labour market conditions will remain favourable, with the unemployment rate projected to remain low at 3.1% of the labour force in 2013. In addition, the financial system continues to demonstrate resilience against the challenging external environment, with financial intermediation expected to continue to provide strong support to domestic economic activity. The strength of Malaysia’s external position remains intact, with international reserves at healthy levels and external debt continuing to be low and within prudent limits.




4.2 OverviewandoutlookoftheMalaysianeconomy(cont’d)

Headline inflation is expected to average 2-3% in 2013. This inflation projection takes into account the expected higher global prices of selected food commodities and adjustments to domestic administered prices. Demand-driven price pressures are expected to be moderate. The wider forecast range reflects the greater uncertainty in the external and domestic developments.

Nevertheless, given the challenging external environment, there remain risks to the growth outlook. As in 2012, the potential re-emergence of instability in the euro area and slower growth in Malaysia’s major trading partners may affect the Malaysian economy. While pressures from global commodity prices have receded, upside risks from non-fundamental factors such as adverse weather conditions and geopolitical developments could push commodity prices higher and adversely affect the growth prospects of Malaysia’s major trading partners. Potential upside to the domestic economy could emerge if the domestic recovery in the advanced economies turns out to be better than expected. In particular, a stronger-than-expected recovery in the housing market may contribute towards a better performance in the US economy.

(extracts from Bank Negara Malaysia Annual Report 2012)

5.0 CriticalAccountingPolicies The adoption of the accounting standards and interpretations (including the consequential amendments) did not have any material impact on the Group’s financial statements, other than the following:-

(i) FRS 3 (Revised) introduces significant changes to the accounting for business combinations, both at the acquisition date and post acquisition, and requires greater use of fair values. In addition, all transaction costs, other than share and debt issue costs, will be expensed as incurred. This revised standard has been applied prospectively during the current financial year with no financial impact on the financial statements of the Group but may impact the accounting of its future transactions or arrangements.

(ii) FRS 127 (Revised) requires accounting for changes in ownership interests by the group in a subsidiary, whilst maintaining control, to be recognised as an equity transaction. When the group loses control of a subsidiary, any interest retained in the former subsidiary will be measured at fair value with the gain or loss recognised in profit or loss. The revised standard also requires all losses attributable to the non-controlling interests to be absorbed by the non-controlling interests instead of by the parent.

We remain optimistic in our 2013 business

outlook.



5.0 CriticalAccountingPolicies(cont’d)

The Group has applied FRS 127 (Revised) prospectively during the current financial year with no financial impact on the financial statements of the Group but may impact the accounting of its future transactions or arrangements.

(iii) Amendments to FRS 7 expand the disclosure requirements in respect of fair value measurements and liquidity risk. In particular, the amendments require additional disclosure of fair value measurements by level of a fair value measurement hierarchy. The Group has applied FRS 7 (Revised) prospectively during the current financial year with no financial impact on the financial statements of the Group but may impact the accounting of its future transactions or arrangements.

6.0 FairValue

Fair value is defined as a rational and unbiased estimate of the potential market price of a good, service, or asset, taking into account.

In accounting, fair value is the amount at which the asset could be bought or sold in a current transaction between willing parties, or transferred to an equivalent party, other than in a liquidation sale.

During the year, the Group has complied with FRS 139 where the standards require most of the financial assets and financial liabilities to be carried at fair value. The adoption of FRS139 has minor impact to the Group where RM50,490 has been fair valued in year 2010.

7.0 ResultsofOperations

7.1 Performanceofcurrentyearcomparedtopreviousyear

The Group’s revenue of RM196.64 million in current year was higher against the restated previous year’s revenue of RM186.11 million which was an increase of RM10.52 million or 5.7%.

The Group’s profit before tax of RM24.25 million was lower against the restated previous year RM24.46 million which was a decrease of RM0.21 million or 0.9%.

Detailed analysis by each segment is as follows:

• In-flightCateringandRelatedServices The revenue for in-flight catering and related services segment for the current was lower by RM2.17 million or

1.3% to RM170.9 million from RM173.1 million restated in the previous year. The reduce in in-flight catering and related services revenue are resulted from the significant reduction of flight routes by BAC’s major customer, Malaysian Airline System Bhd (MAS). The route cuts are part of MAS’s major cost revamp, includes focussing on profitable routes, consolidating its administration base from Subang to KLIA and abandoning Kota Kinabalu as strategic hub. In Aug 2011, MAS, AirAsiaBhd (AirAsia) and its long-haul low-cost unit AirAsia X Sdn Bhd (AirAsia X) entered into a Comprehensive Collaboration Framework (CCF) which has resulted in uncertainties in the MAS business model. Revenue from other foreign carriers are expected to remain stable.

The 2013 outlook for in-flight catering division is expected to be positive due to the completion of KLIA 2 in June 2013. It is expected to handle more flights as compared to the previous year.



7.0 ResultsofOperations(cont’d)

7.1 Performanceofcurrentyearcomparedtopreviousyear(cont’d)

• F&BSegment The revenue for F&B segment for the current year contributed RM20.1 million thus a significant increase from

RM8.9 million in the previous year. This is largely resulted by an additional RM15.9 million in revenue for the current year contributed from the acquisition of Dewina Host Sdn. Bhd. which was concluded on 21 July 2011.

• WarehouseRental,FreightForwarding,Transportation&InsuranceAgency The revenue for warehouse rental, freight forwarding, transportation and insurance agency segment for the

current year was at RM6.4 million increasing from RM6.2 million in the previous year. This division is no longer the focus of the Group although it maintains a presence in North Port with a warehouse on a sub-lease land from KTM Warehouse Management Sdn. Bhd., a related company of the Malayan Railway Administration. The management had taken the necessary action to stem-out further losses from this business segment.

8.0 BalanceSheetandFundingSources

One of our focus on risk management is on Balance Sheet size and Composition. While the Group’s asset base changes arising from market fluctuations and client’s activities, and the opportunities of new businesses, our Balance Sheet size and composition reflects (i) our ability to tolerate risk, (ii) our ability to access to funding sources and (iii) the mix of debt and equity in our Enterprise value to seize new business opportunities.

As the Group expands it business critical to move an efficient capital management mechanism and a strong finance committee to dynamically to manage assets and liabilities, including:-

• quarterly planning and review• business-specific limits• setting and monitoring key metrics and • scenario planning and analyses.

Your Group has set up an Executive Board to carry out the above.

Total Asset of the Group increased to RM340.2 million from the restated RM303.8 million in the previous year representing a growth of RM36.4 million or 11.9%, largely the result of the acquisition of Admuda Sdn. Bhd.



8.0 BalanceSheetandFundingSources(cont’d)

Group Shareholders Funds for the year likewise increased to RM217.0 million from RM171.5 million, a growth of RM45.5 million or 26.5%.

Group’s Total Liabilities for the year decreased to RM109.7 million from RM123.9 million in the previous year.

Correspondingly, Net Assets per Ordinary Share of the Group for the year has improved to RM1.01 from RM0.95 in the previous year.

The following tabulation shows the Group’s external funding sources:-

BHB BACH TISB CB DH TOTAL

External Credit Facilities 32,690,613 19,103,580 265,921 2,428,779 - 54,488,893Average Cost of Borrowings (p.a) 6.63% 6.3% - 7.4% 6.98% 7.44% -

9.0 OverviewandStructureofRisksManagement

The Board acknowledges its overall responsibility of maintaining Brahim’s Holdings Berhad’s (“BHB” or “the Company”) system of internal control, which provides reasonable assessment of effective and efficient operations, risk management practices, internal financial controls and compliance with laws and regulations, as well as with internal procedures and guidelines, to safeguard the shareholders’ investments and the Company’s assets.

However, due to the complexity and management of a wide range of risks, the nature of these risks means that events may occur which could give rise to unanticipated or unavoidable losses. It should be noted that the Company’s system of internal control and risk management are designed to provide reasonable but not absolute assurance against material misstatement, frauds or losses. It is possible that internal controls can be circumvented or overridden. Due to the changing circumstances and conditions, the effectiveness of an internal control system may vary over time.

The rationale of the system of internal controls is to enable the Company to achieve its corporate objectives within an acceptable risk profile and cannot be expected to eliminate all the risks. The Group’s system of internal control does not apply to Jointly Controlled Entities where the Group does not have full management control over them.

10.0 RecentAccountingDevelopments

There were no major accounting developments that may affect the company and the group for the current financial year. See Note 5 to the consolidated financial statements for information about significant Accounting Policies and Note 4 on Basis of Preparation of the financial statements.

11.0 RisksFactorsThatMayAffectOurBusiness

• The ongoing uncertainty over global economic growth remains a key concern. The Eurozone debt crisis lingers, recovery in the US remains unconvincing and growth in the Asia region seems to be moderating. Overall, a slower global economy could have an unfavourable impact on tourist arrivals and air passenger traffic growth, which will adversely affect the performance of our in-flight catering and F&B outlet operations at the airports. Concern over potential acts of terrorism and epidemic outbreaks could also serve to hurt the air travel industry, and undermine our core business.



11.0 RisksFactorsThatMayAffectOurBusiness(cont’d)

• Rising costs and competition are also common risk factors within the food-related industry. In that respect, we have always possessed the core competencies, drawing on our experience and knowledge in food services and established relationships with our business partners and customers, to mitigate such business risks.

• Restaurant operation business in airports is highly competitive and is characterized by sensitivity to price changes, branding of products and changes in consumer preference and behavior. It is the intention of BHB to constantly review business strategies together with Host International Inc to mitigate business risks associated with restaurant operations. The Group would review the operation strategies on regular basis to enable the Group to react swiftly to changes in the industry to mitigate the industry risks.

• Like any other concessions, DHost’s rights to operate the restaurants in the airport could materially and/or adversely affected by changes in political and economic conditions in Malaysia. These political and economic uncertainties include, but are not limited to, changes in political leadership, nationalization, expropriation and taxations.

• DHost’s rights to operate in the airports are based on negotiated tenancy terms. DHost does not expect immediate major financial impact arising from the loss of rights by DHost until the expiry of the respective tenancies. In forging ahead the business strategies of BHB, the Board constantly reviews its operations and business activities and carefully considers business opportunities that may arise and present itself to the BHB Group. In the event that DHost loses the rights to operate the restaurants in the airports, DHost will take proactive steps to consider and venture into other profitable business with the view to counter for the loss in revenue and profit contribution of DHost. DHost’s rental expenses was approximately 30% of the total operating expenses. As the rental expenses comprise a significant portion of the total operating expenses of DHost, any substantial increase in rental may adversely affect the profitability of DHost. Most of DHost’s tenancy agreements are for a period between 2 to 3 years. Upon the expiry of the tenancy of a restaurant, Malaysia Airports (Sepang) Sdn Bhd or its affiliates (“Landlord”) would have the right to review and alter the terms and conditions of the tenancy agreement. DHost would negotiate with the Landlord on the terms and conditions for the extension of the tenancy upon the expiry of the tenancy agreement. However, there is no assurance that the tenancy agreement will be renewed or extended. Nonetheless, based on the successful renewal of rental agreements by DHost historically, the management believes that DHost would be able to maintain a cordial relationship with Landlord in the future.



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